General Dynamics Corporation GDis set to release first-quarter 2022 results on Apr 27 before market open.
General Dynamics delivered an earnings surprise of 3.72% in the last four quarters, on average. The dismal performance across most of its business segments is likely to impact its first-quarter results, while increased expenses might have hurt the bottom line.
Aerospace Unit’s Performance to Remain Gloomy
General Dynamics’ Aerospace business unit is projected to benefit from the strong order activity at Gulfstream and the recovery in air travel, which tends to boost aircraft demand. However, first-quarter revenues of the segment are likely to have been adversely impacted by lower delivery rates.
The Zacks Consensus Estimate for the Aerospace segment’s revenues in the first quarter is pegged at $1,627 million, indicating a 13.8% decline from the revenues reported in the year-ago quarter.
Marine Systems – a Growth Driver
The Marine Systems segment can be expected to deliver an improved top line in the soon-to-be-reported quarter, buoyed by the increased demand for shipbuilding from the U.S. Navy.
The Zacks Consensus Estimate for the Marine segment’s revenues in the first quarter is pegged at $2,519 million, indicating a 1.4% improvement from the revenues reported in the year-ago quarter.
Lower Demand to Hit Combat Systems
The lower sales volume due to lower demand on account of the constrained budget environment faced by the U.S. Army is likely to have impacted the top line of Combat Systems in the to-be-reported quarter. However, the international growth of its Abrams and wheel combat vehicles may have partially offset downward pressure on the revenue performance.
The Zacks Consensus Estimate for the Combat Systems segment’s revenues in the first quarter is pegged at $1,731 million, indicating a 4.9% decline from the revenues reported in the year-ago quarter.
Chip Shortage to Impact Technologies Unit
The Technologies unit’s revenues in the first quarter are likely to have been dented by the short supply of chips and other key components of mission systems. The Zacks Consensus Estimate for the Technologies unit’s revenues in the first quarter is pegged at $3,111 million, indicating a 2.8% decrease from the revenues reported in the year-ago quarter.
Other Factors to Note
The soft revenue performance of the majority of its segments makes us skeptical about General Dynamics’ overall top line in the first quarter. Additionally, the increased research and development expenses related to the ongoing product development efforts, including flight test activities for the G700, are likely to have an adverse impact on GD’s soon-to-be-reported quarterly earnings.
General Dynamics Corporation Price and EPS Surprise
General Dynamics Corporation price-eps-surprise | General Dynamics Corporation Quote
Q1 Estimates
The Zacks Consensus Estimate for first-quarter revenues is pegged at $8.95 billion, suggesting a decline of 4.7% from the year-ago quarter.
The Zacks Consensus Estimate for first-quarter earningsis pegged at $2.49 per share, indicating growth of 0.4% from the prior-year reported figure.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for General Dynamics this time. A stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. However, that is not the case here as given below.
General Dynamics has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few defense companies that you may want to consider as these have the right combination of elements to post an earnings beat this season:
Northrop GrummanNOC has an Earnings ESP of +1.32% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northrop Grumman has a four-quarter average earnings surprise of 11.05%. The long-term earnings growth rate of NOC stands at 6.2%. The Zacks Consensus Estimate for Northrop Grumman’s first-quarter sales and earnings is pegged at $8.9 billion and $5.95 per share, respectively.
Spirit Aerosystems SPR has an Earnings ESP of +9.34% and a Zacks Rank #3. It has a four-quarter average negative earnings surprise of 14.56%.
The Zacks Consensus Estimate for SPR’s first-quarter earnings indicates an improvement of 21.5% from the prior-year reported figure.
CAE CAE has an Earnings ESP of +11.11% and a Zacks Rank #3. CAE delivered a four-quarter average earnings surprise of 0.72%.
The long-term earnings growth rate of CAE is pegged at 8%. The Zacks Consensus Estimate for CAE’s first-quarter earnings is pegged at 18 cents per share.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Northrop Grumman Corporation (NOC): Free Stock Analysis Report
General Dynamics Corporation (GD): Free Stock Analysis Report
Spirit Aerosystems Holdings, Inc. (SPR): Free Stock Analysis Report
CAE Inc (CAE): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
